Advice needed--being sued by attorney for Discover Card

[bcohen]

Is standing a "loser argument"? If the debt was securitized and sold, and DFS's S.E.C. filings demonstrate this, then Discover Bank is solely the servicer, and has not suffered money damages as a result of my nonpayment!

[HHM]

It's still a loser argument.

But hey, you do what you want. So, when the judge asks you (1) did you have a discover card and (2) did you stop making payments...how exactly do you plan to respond?

But your honor, discover card assigned the debt to xyz trust so it doesn't matter that I stopped paying...Good luck with that.

Keep in mind, the suit is not for "money damages", it is for breach of contact. It doesn't matter that the servicer hasn't been harmed. Whether you like it or not, the right to collect a debt CAN BE transferred. I can go out right now, spend $500,000 and buy about 5 to 25 million in bad debt. I can sue the debtors to collect, and it is perfectly legal.

I am not an advocate for banks, but I am an advocate for truth and reality. And reality is, the defense you are contemplating is a "pretender defense" on the level of those that say income tax is unconstitutional.

The problem is, people get desperate, so they will believe anything if it fits their situation, I get that.

[bcohen]

I understand what you are saying--but I am not being sued for breach of contract. The plaintiff is unable to provide a signed contract or credit application, and is thus suing under "account stated". Of course, I believe that SOL is a much stronger defense, and that it will be what ultimately crushes this lawsuit (assuming the judge sees it my way) and not the defense of standing. However, it would seem best to raise as many defenses as can be reasonably argued, and it does not seem unreasonable to suggest that if DB Servicing, LLC was merely the servicer of the account in question, and per their S.E.C. filings did not actually suffer money damages as a result of my default, then they lack standing to sue.

[sarahrob2248]

Hey bcohen, I am brand new to the forums, but I am an attorney, and I feel like I can add a little to this discussion....first, a judge likely wont care that the Plaintiff can't produce a signed application. The fact that you had a Discover card and used it kind if defeats the need for that, unless you are alleging that it was opened fraudulently by another person. I understand that it's something Plaintiff needs to prove, but for better or worse, judges often take a common sense approach to things. You opened a card, you used it, you didn't pay as agreed. That's pretty much it. I don't live in Arizona, so judges may be different there, but around here, judges who deal with these type of cases take an equitable approach, if you will. They aren't as concerned with procedural formalities if you admit the card was yours and you didn't pay...

As far as standing goes, I agree with what was stated above. You can definitely deny that they have standing and raise it as an affirmative defense, but do realize that there will be documentation somewhere from Discover that the servicer can collect on the debt. They may not have provided you with the evidence yet, but a huge corp like Discover does this stuff all time and will have their own attorneys who have ensured compliance with assignment rules. Lack if standing can be very difficult to prove in cases like this. Unless Discover admits to lack of standing, I wouldn't hang my hat on that defense.

Just my two cents.

[sarahrob2248]

Edited to remove random legal ramblings..

[HHM]

Be careful about the "reasonably" argued idea. Not that this will likely come up in your run of the mill consumer debt collection case and most judges are lenient with pro se individuals. There is a fine line between a "good faith" argument and "frivolous" argument. Even if the argument is in good faith, you need to be pretty sure the issue hasn't already been decided. I can practically guarantee you are not the 1st person to attempt the argument, so it is likely an issue that has been resolved. (and given the comments on this forum, you should take heed that the issue is largely resolved in the creditors favor). So, an issue that has already been decided, the losing argument becomes a frivolous argument, and if you get a particularly nasty judge, he could hit you for attorney fees. Now granted, if your going to file BK anyway, not a big deal.

I don't really think it will come to that. But FYI.

[bcohen]

Update: I see on the court website that I lost the lawsuit, and a summary judgment was awarded. I have already spent my bank account balance below the paltry $150 exemption amount in this state, since I used the money to buy my college textbooks. I am not employed at this time, and don't have any wages to garnish. I have not yet received any notification from the court, or the collection law firm.

It is my intention to not pay this debt, and instead file for bankruptcy. Is there anything I need to look out for (other than not using a bank account until I get my BK filed) or should I just wait for the creditor to make the next move. I am hoping to file my federal taxes and use my small (less than $300) tax return to pay off some unpaid state income taxes from previous years.

Any advice?

[ValleYum]

Paper check for your tax return!

[Floridagail]

I received papers in mail about a week after my judgement, I think they are called debtor exam. They asked for all my bank accounts, 401k account numbers, Job info etc. I did not want to provide so I just filed my bankruptcy to avoid it.

[rta]

Just an FYI, here is a case about standing involving Discover Bank and DFS. Kenneth Bruner successfully appealed the issue that DFS was not the same as Discover Bank.

http://scholar.google.com/scholar_case?case=4009258465406068717&q=Kenneth+Bruner+v.+DFS&hl=en&as_sdt=2,5

However, as you can see, the trial court ruled against Bruner first, and he had to take this to the appellate level before he won. And also, this is in Kentucky. Just thought you might want to know.

[bcohen]

Thanks for the info, rta. I am going to file for bankruptcy, because I am planning to graduate from college in December, and it would be silly to have this judgment hanging over my head when I start working again. Also, many employers do a pre-employment credit check, and won't hire a person with outstanding judgment(s). A closed bankruptcy looks much better, and also eliminates the possibility of further collection action.

It is an interesting question whether I could file for Chapter 7 bankruptcy, and then (while enjoying the protection of the automatic stay) attempt to appeal the judgment on the grounds that the lower court erred in concluding that Discover Bank had standing to sue, and the debt was within SOL.

However, that seems like a lot of hassle, and the only real benefit to a successful appeal would be creating case law that could help other people in the same situation (those who have debts which would have been past SOL had the law not changed in 2011). It doesn't appear that it would accomplish anything for me that a successful bankruptcy discharge would not.

I would, however like some advice on how to have the judgment set aside or marked as "satisfied" after bankruptcy here in Arizona. I won't be using an attorney to file (since I have no money to pay one) so saying to "ask my attorney" won't help.

[despritfreya]

However, as you can see, the trial court ruled against Bruner first, and he had to take this to the appellate level before he won.

Mr. Bruner did not "win". All he got was a remand to the trial court for the purpose of DSF proving it had the authority (through some servicing agreement) to act on behalf of Discover. Now, maybe in the end the matter was thrown out because DSF could not show it was a proper agent of Discover (which may have led to a second suit - this time brought by the correct party) or maybe the matter was settled. Based upon the facts of the case the trial court was wrong and the remand was proper.

The only reason I point this out is that the "win" belief is prevalent throughout the "show me the note/standing" mortgage cases and in each case where there appears to be a "win" for the homeowner, such is not the case. The "win" only means the creditor has to correct its paperwork before moving forward. This Bruner case is no different.

Des.

[Floridagail]

Just to let you know, After my filing bankruptcy discharge, the county court automatically changed my judgement to satisfied, I had to do nothing.

[LadyInTheRed]

Just to let you know, After my filing bankruptcy discharge, the county court automatically changed my judgement to satisfied, I had to do nothing.

The procedures will vary by state.

[rta]

Mr. Bruner did not "win". All he got was a remand to the trial court for the purpose of DSF proving it had the authority (through some servicing agreement) to act on behalf of Discover. Now, maybe in the end the matter was thrown out because DSF could not show it was a proper agent of Discover (which may have led to a second suit - this time brought by the correct party) or maybe the matter was settled. Based upon the facts of the case the trial court was wrong and the remand was proper.

The only reason I point this out is that the "win" belief is prevalent throughout the "show me the note/standing" mortgage cases and in each case where there appears to be a "win" for the homeowner, such is not the case. The "win" only means the creditor has to correct its paperwork before moving forward. This Bruner case is no different.

Des.

Thanks for the comments and taking an interest in the Bruner case.

From the feedback I found, the plaintiff did refund the money it removed from Bruner's bank account, and the appeals court also refunded the $150 filing fee that Bruner paid. There are no further reports on continuing action on this case. It sounds like enough of a win to me.

It probably will not work to depend entirely on the issue of standing when fighting a debt collection lawsuit. However, since OP is filing for BK, the issues have moved on. Also, once he files for BK, the court will drop the case and stop dealing with it.